JobsOhio caught in legal limbo

Tuesday

Apr 24, 2012 at 12:01 AMApr 24, 2012 at 12:17 PM

JobsOhio is still waiting on its 100 million bucks. A lawsuit filed last year by a liberal policy group and Democratic lawmakers challenging the constitutionality of Gov. John Kasich's privatized development agency has had a rough go in the courts, but it's kept the state's liquor profits out of JobsOhio's hands.

Joe Vardon, The Columbus Dispatch

JobsOhio is still waiting on its 100 million bucks.

A lawsuit filed last year by a liberal policy group and Democratic lawmakers challenging the constitutionality of Gov. John Kasich’s privatized development agency has had a rough go in the courts, but it’s kept the state’s liquor profits out of JobsOhio’s hands.

Kasich had devised a unique funding stream for JobsOhio that would allow the agency to lease the state’s wholesale liquor profits for about $1.4 billion — a transaction that would pump up JobsOhio with an estimated $100 million per year for economic development.

But to finance the lease of the state’s liquor profits, JobsOhio would need to seek funding on the bond market, something interim chief investment officer Mark Kvamme is reluctant to do with a lawsuit hanging over the agency’s head.

The lawsuit, filed by Progress-Ohio, lawyer Victoria Ullman and Democratic state Reps. Dennis Murray of Sandusky and Michael Skindell of Lakewood, was dismissed in December by Franklin County Common Pleas Judge Laurel Beatty and is now before the Franklin County Court of Appeals.

When Kasich and Jobs-Ohio announced parameters of the liquor-profits lease agreement in January, the expectation was for the deal to be completed sometime in the first quarter. JobsOhio replaced the Ohio Department of Development as the state’s main job-creation agency for attracting companies and keeping others here.

“We would prefer certainly not to go to market with the pending litigation, but in the meantime, however, we are proceeding in the normal course of preparing and getting ready to go to market,” said Laura Jones, a spokeswoman for JobsOhio.

It’s difficult to determine the immediate effect the lawsuit has had on Jobs-Ohio’s performance. Through private donations and a $1 million allocation from lawmakers to cover startup costs, JobsOhio has hired 25 employees and established an office on the 15th floor of the Huntington Bank tower Downtown.

Kasich credits JobsOhio with aiding in creating or retaining about 80,000 jobs last year, even though it wasn’t open for business until July. Kvamme said JobsOhio will release its productivity report for the first quarter of 2012 on May 1, a report he said will be positive.

Previously, JobsOhio officials said the $100 million would be used primarily to offer loans, grants and funds to train workers for companies, complementing programs that already exist at the state level.

“I think it shows the old system was working,” said Brian Rothenberg, executive director for ProgressOhio. “It shows there wasn’t a need to take public money and dump it into a private entity for risky schemes.”

Rob Nichols, a spokesman for Kasich, said, “We will always want to do more, we’ll always think we can do more,” when asked to respond to Rothenberg’s comments.

Nichols also acknowledged “concern” over another component of the liquor-profits transfer that’s on hold: the $500 million Jobs-Ohio would pay to the state that would go into the general revenue fund to balance the budget. The state’s two-year, $55.8 billion budget passed in July with the $500 million payment from JobsOhio figured in.

The current legal fight over JobsOhio has had several twists and turns, but it is currently centered on whether the Democrats and liberal group had grounds to sue. The law passed that created JobsOhio called for all lawsuits to be filed within 90 days, but when Progress-Ohio filed, the state ultimately argued that no one had been injured to justify a lawsuit.

A ruling on the appeal is expected this year.

jvardon@dispatch.com

@joevardon

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